The GBPUSD took it on the chin on Friday “after the fact” from the Scotland Referendum (the technicals showed persistent weakness too).
The pair has rebounded in trading today, moving back above the 100 hour MA (blue line in the chart below – bullish), but remains below the broken trend line from last week’s trading at the 1.6370 (see this weeks VIDEO PREVIEW for the GBPUSD HERE).
Technical Analysis: GBPUSD finding support on the chart against the 100 hour MA at 1.6323 and the 50% retracement level at 1.62867
As NY traders enter for the day, the pair is finding support against the 100 hour MA (blue line in the chart above). That level comes in at the 1.6323 level currently. There is additional support against the 50% level at the 1.62867. Bulls need to see the price stay above these levels to keep the buyers in control. A break below and the mood may once again turn sour for the buyers. ON the topside, get above the broken 38.2% at the 1.63424 level and then the broken trend line at 1.6370, and the buyers will be feeling a bit better.
Bulls trying to show their support again today. We will see if the follow through can continue.
The economic calendar starts off the US trading week with some comments from central bankers.
Draghi speaks at 1300 GMT at an EU parliament in Brussels. For a preview of what he might say, check out what Noyer and Coeure said on the weekend.
The other main events are an hour later at 1400 GMT with US existing home sales and Eurozone advance consumer confidence for September. Five minutes later, New York Fed President Bill Dudley will have comments at a Bloomberg event.
At 1640 GMT, Bank of Canada #2 Wilkins speaks in Toronto. The comments are embargoed so there could be something market moving but it’s very rare for anyone but the BOC Governor to signal any changes in policy.
The strongest currency in trading today is the GBP. On Friday, the GBP initially rallied strongly on the back of the rejection of the Scotland Referendum, but later fell back down – erasing the gains. Today the currency is stronger against all the major pairs but is also off the highs.
The weakest currency is the AUD. The AUD is trading at the 7 month low as concerns about China and lower commodity prices are weighing on the currency. The CAD and NZD are also being impacted by the trend in commodities as both are also down on the day.
GBP is the strongest currency. The AUD is the weakest in trading today
The greenback is mixed – rising against the commodity complex but down slightly versus the other major currencies (down the most against the GBP).
The EUR is only down against the GBP. ECBs Draghi speaks at 9 AM ET and his comments will be eyed in the aftermath of what was a disappointing TLTRO initiative last week.
In a session short on data and rhetoric and waiting for Draghi at 13.300 GMT it’s been left to commodity currencies to provide the action this morning to kick off the week, and it’s been a lively session.
The o/n USD sell-off was already showing signs of running out of steam with cable capping at 1.6366 and EURUSD at 1.2868 with USDJPY once again finding buyers into 108.60 but it was the AUD that set things going on reports by Roubini Economics that they saw AUDUSD down below 0.7500.
Whether that was the cause or the straw that broke the kangaroo’s bounce is not clear as metal prices were on the back foot but it showed the fragility of the Aussie $ right now and we saw a quick dip from 0.8930 to 0.8905 as leveraged acccounts sold heavily. It wasn’t long before we saw another wave of selling which triggered stops all the way down to 0.8865 where it ran into another layer of bids.
AUD pairs all suffered a similar fate apart from AUDCAD which was somewhat blunted by USDCAD rising from 1.0930 to test 1.1000 again as oil prices fell in early morning trading while the kiwi gave up its post-election gains with NZDUSD back down to test 0.8100
On the major pairs it was all a bit more civilised with cable drifting back to 1.6328 and EURUSD finding itself mostly pinned around 1.2850 ahead of Draghi and a large option expiry today. USDJPY clawed its way back above 109.00 then spent its time camped around 109.05 while USDCHF had another look at 0.9400 before stepping back.
A strange and somewhat fragmented session but one that sets us up nicely for more volatility today and into the week.
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